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Department of Treasury debt collection - SBA Loan Default

When a business owner defaults on a business loan that was taken from a bank
which was secured by a SBA guarantee, there are certain procedures that
happen during a default situation. Initially the banker will attempt to
pursue the borrower to collect the debt. Once the bank deems that the debt is
not collectable, they will file a claim with the SBA for a percentage of the
loan guarantee and the bank is now out of the picture. The SBA will then send
a 60 day demand notice to all guarantors on the loan as part of the personal
guarantee associated with the loan documents. That 60 day demand notice will
advise the borrower to either pay balance in full or present that office with
proper documentation for the potential to get an "Offer in
Compromise" submitted and accepted to settle for less than the full
balance either in a lump sum payment or a payment plan. Most people just
simply ignore the letter because they are still in a state of shock or
depression that their business has failed and they are struggling to find the
next step. There is also a good amount of people who send in the paperwork
late or very insufficient to the SBA standards. If the SBA feels like the
offer is simply to low, incomplete, or ignored they simply turn the file over
to U.S Treasury to attempt to collect their debt. The Treasury uses 5
different collection agencies to collect these debts which adds a hefty 28%
addition to the amount. It seems that I get phone calls and emails every day
in the last few months from defaulted loans in the Treasury Department. The
outcome is much more harsh for the defaulted borrower if the SBA passes the
file down to the US Department of Treasury. They almost force you into
bankruptcy by threatening wage garnishment and unreasonable settlements and
payments plans. The D.O.T does have a procedure for settlements and the
documentation is similar to the SBA forms. I highly recommend speaking with a
firm that has experience dealing with SBA defaults or the Department of
Treasury. I am always more than happy to take phone calls or emails from
anybody needing advice on submitting or preparing an Offer in Compromise.
Ryan Lineham - Bridge Management Consulting - Ryan@BridgeMgt.com

rhouse | Window Shopper |
10/31/2014 - 6:54 pm

I need help. I have had SBA loan since 2004. Have made payments. Never got
got certified letter from SBA. They turned me over to Treasury Dept. I have
copies from bank where payment has and still being made. How can thi be??

BizResearcher | Window Shopper |
11/2/2014 - 8:03 pm

Show Replied Text…

I need help. I have had SBA loan since 2004. Have made payments. Never got got certified letter from SBA. They turned me over to Treasury Dept. I have copies from bank where payment has and still being made. How can thi be??

Have you made all payments on time? If so, have you contacted your bank? They
are the ones who would have reported you to the SBA as in default of the
loan. If you are current on payments and the bank is unwilling to straighten
out the problem, you may need to contact an attorney.